Report indicates AMD mulling its options

AMD is deep in the red, and may have to result to dramatic changes in how it …

It's no secret that AMD is in trouble. Despite cost-cutting measures, the company has lost hundreds of millions of dollars this year, even once goodwill charges are removed from the equation. The current state of the CPU manufacturer finally resulted in the ousting of Hector Ruiz and the appointment of Dirk Meyer as company CEO, but replacing the nameplate on the office won't change the fact that AMD is hemorraghing cash.

BusinessWeeksuggests that AMD is preparing to unveil the details of a sea change in how the company produces its processors, and trots out many of the usual suspects as plausible alternatives. Chartered gets the nod over TSMC as a possible AMD partner for chip production (and fab expenditures), but the basic concept of AMD working with a Far East foundry remains unchanged. As an aside, I'm not sure Chartered makes the most sense as an AMD partner. Chartered is still ramping 65nm production and currently operates a single 300mm fabrication facility in addition to five 200mm facilities. AMD's Fab 36 is already running on 300mm fabs and 65nm parts, and we know at least some 45nm fabrication has been done there—the Shanghai wafers the company produced at the beginning of January were built at Fab 36, not the newly renovated Fab 38.

There are other potential options. AMD could attempt to sell one or both of its fabs, although there's speculation that this could run afoul of the company's x86 licensing agreement with Intel, which is believed to specify that AMD must own the majority of its own fabrication space. Intel, on the other hand, might choose not to enforce such terms, particularly given the amount of antitrust scrutiny the company currently faces.

AMD might also attempt to sell its fabs to major backer. Middle East wealth fund Mubadala Development is a prime contender for such a move, seeing as that group already invested $622 million in AMD last year. AMD would then lease space from the Abu Dhabi-based investment firm. Alternatively, AMD could attempt to spin itself off into two businesses, one devoted to fabrication (AMD Foundry) and the other to design (AMD Design). Regardless, BusinessWeek believes a major announcement is in the cards, and while some of these ideas are a bit more out there than others, a major change may be what AMD needs in order to convince investors the company is going someplace other than down.